I’ll be honest here, I don’t watch TV at all – I follow written news feeds while I’m writing and working, and I find that just works more efficiently for me than sitting down and enjoying the spoken prose of someone.

Now the question I have is this, if the resource is so valuable why aren’t people willing to pay enough for it to be on pay-per-view? Surely, if it is adding such an important view to peoples lives they will be willing to put funds towards it.

The common argument against this is that it has other social benefits, such as educating the public. But I was under the impression that the viewing numbers were very low – how can it be educating the public if only people who have either already set their opinions or would get the information from other sources are the ones viewing it?

Now I’m sure its very good, and that the information it provides is superb. But unless people are willing to put their money where there mouth is, the point of view I’ve expressed here makes it understandable that the government is keen to scrap it. Now, I would be more than happy to be convinced otherwise – and to be shown significant and important social benefits. However, if anyone mentions the GC their comment is not going to be treated seriously 😉

Let’s start by noting that your “if it’s so good, why isn’t it on pay-per-view?” question could be asked of any programme — from Q+A to ‘Go Girls’ — that receives public funding.

None of them are available on pay-per-view primarily because such a pay-per-view platform does not actually exist. TVNZ experimented with charging for some of its Ondemand content and the experiment was a failure. Even very small payments via a token system represented too high a barrier for an internet audience.

We’ve seen this scenario played out time and again on the internet. The New Zealand Herald’s “premium content” experiment failed because the income it brought in was less than the internet advertising revenue forgone by placing the content behind a paywall. It also failed because it deprived that content (which was largely commentary and analysis) of currency and a broad audience. Columnists complained because they lost touch with their readers, who were often a valuable resource.And that wasn’t even a pay-per-view model, but an all-you-can-eat subscription system.

A subscription model might be somewhat more viable more viable than PPV, but would still be inappropriate for a current affairs programme, which relies on being part of a broader conversation and from roughly contemporaneous viewing. A programme’s influence and importance diminishes when its reach diminishes. It would be much harder to convince guests to make themselves available for a programme that virtually no one watched. And who would finance the fixed costs of skilled staff and production facilities while the programme attempted to build an audience via a model that has not worked for anyone else?

Meanwhile, even in the unlikely event that it could be made to work on a financial basis, a move to paid-only access would disenfranchise the large part of the audience that lacks the sophistication or willingness to watch television via the internet. Media7 will be ending not on its merits, but because TVNZ 7, the channel that funds and screens it, is disappearing. TVNZ 7 “skews old”, because it delivers programming of value to viewers over 50 — that’s the group with most to lose when the channel dies. The key demographics of commercial channels — whether they are owned by the state, private shareholders or a private capital firm — top out at 50, because the demographics under 50 are those required by commercial advertisers.

Media7, like other local productions on TVNZ 7 and in non-commercial slots on commercial television, is public service content. The delivery of public service content to an exclusive paying audience is a non-sequitir. As things stand, Media7 is used as a teaching tool in secondary and tertiary education. Would we transfer the cost of its production to that sector? How would we price subscriptions when a programme might be viewed by a hundred students at a time? How would students be able to access it outside the classroom? Who will pay for this?

I’m also puzzled by your “impression” that Media7 viewing numbers are “very low”. I have no such information, but I do know that the cumulative monthly audience for TVNZ 7 is around 1.5 million. That is, according to Nielsen, a million and a half New Zealanders find some use for it in the course of a month. Some might watch just once, others every night, but it seems a good return on an annual taxpayer investment of around $15 million. Yes, you could ask the audience, through a system you’d have to first invent and popularise, to pay a trifling amount every week for this service. But you could say the same of any other NZ ON Air-funded programme, or even any other public service. It would be novel, but it certainly would not be efficient.

Hi Russel, thanks for the thoughtful comments. I’ll note down some replies:

“Let’s start by noting that your “if it’s so good, why isn’t it on pay-per-view?” question could be asked of any programme — from Q+A to ‘Go Girls’ — that receives public funding.”

Indeed – the same argument can indeed be applied to these things, indeed I’d even say that it should. I have merely focused on TVNZ7 because that was what people were talking about at the time.

“None of them are available on pay-per-view primarily because such a pay-per-view platform does not actually exist. TVNZ experimented with charging for some of its Ondemand content and the experiment was a failure. Even very small payments via a token system represented too high a barrier for an internet audience.”

This point in of itself questions the value of a whole range of things that are being provided at present does it not? If small payments are a barrier, it is likely because the value associated with the show is sufficiently low.

“A programme’s influence and importance diminishes when its reach diminishes. It would be much harder to convince guests to make themselves available for a programme that virtually no one watched”

This is a point I agree with 100% – and I see it as a great argument for having government involved in things being set up as there are “multiple equilibrium”. But once the station is set up, and its credibility is in place, the argument for government involvement on a pure “private benefit” basis goes away. We need a clear argument regarding why this is a “social good” before we can justify prolonged private involvement – and that is what I’m trying to fish out here 😉

“Media7, like other local productions on TVNZ 7 and in non-commercial slots on commercial television, is public service content. The delivery of public service content to an exclusive paying audience is a non-sequitir. As things stand, Media7 is used as a teaching tool in secondary and tertiary education. Would we transfer the cost of its production to that sector? How would we price subscriptions when a programme might be viewed by a hundred students at a time? How would students be able to access it outside the classroom? Who will pay for this?”

Same argument as above, for it to be seen and justified as public service content we need to ask what “social value” exists BEYOND the social value being contributed by its nearest substitute. It isn’t just a matter of saying “having accessible information is good”, it is a matter of saying “what additional social value is being added by this additional source of information”.

“I’m also puzzled by your “impression” that Media7 viewing numbers are “very low”. I have no such information, but I do know that the cumulative monthly audience for TVNZ 7 is around 1.5 million. That is, according to Nielsen, a million and a half New Zealanders find some use for it in the course of a month.”

Fair call, I was just relying on what people have generally stated to me – and I have very little knowledge. I’m happy to believe that many people watch it. However, if a lot of people do watch it, why can’t it pay its own way through advertising revenue?

“But you could say the same of any other NZ ON Air-funded programme, or even any other public service. It would be novel, but it certainly would not be efficient.”

Potentially – but the exercise of asking ourselves what the marginal social value of one more news service is will help to tell us what the “efficient” option really is.

Your comments have helped to flesh out a lot of background which is very useful for me – however,I still want an argument for why the show provides much value beyond the personal value of those who watch it, and the social value that could be provided by substitutes.

And I am keen to hold all shows to this standard, again I only picked this out because the discussion was flying around – and I hadn’t seen this point made by either side 🙂

This point in of itself questions the value of a whole range of things that are being provided at present does it not? If small payments are a barrier, it is likely because the value associated with the show is sufficiently low. In which case, nothing is worth anything.

The programmes in the failed TVNZ On Demand experiment included Shortland Street — the most popular drama ever to screen on New Zealand television, and still one of the highest-rating shows each week. But people didn’t want to pay for catch-up viewing. That has far more to to with the inertial problem of asking people to stop and reach for their wallets in an internet environment.

Ditto, when newspaper paywall experiments failed, it wasn’t because the content was of no value, but because limiting its currency deprives it of value.

“Ditto, when newspaper paywall experiments failed, it wasn’t because the content was of no value, but because limiting its currency deprives it of value.”

I agree with this … in part. However, when we talk about funding “one more” opinion or news show, we need to ask what the marginal social value of that show is.

So the government uses the information externality to help fund a couple of news shows, I can buy this. However, this isn’t a justification for ever increasing the number of available news shows.

So in order to defend Media7 we need to say it is offering something that provides social value that is not otherwise available (it has to satisfy both) – the aim of the post was to get people to articulate to me what they think this is!

You can make a merit good case for subsidising local content (note that merit good just mean “Nice stuff we think you should watch more of than you’d choose to do on your own, just ’cause we think it’s nice); you can make an external benefits market failure case for subsidising more local news content than would otherwise be provided, and especially in the categories of news programming that would not otherwise be provided (external benefit here works through increased voter knowledge as voting input).

I’m not sure that either of those necessarily leads to having government owned stations unless that somehow winds up being the lowest cost mechanism. I’m also not sure that the external benefits case necessarily winds up making it worthwhile to actually provide the subsidy. It’s possible that it’s efficient, but we’d need some measure of the actual benefit provided relative to the cost.

The argument would then be for the government to sell off the broadcasters (TV1 and TV2 included) and to pay private broadcasters to air newsmagazine content (Backbenchers, Media7) that otherwise wouldn’t be aired. If the total amount that govt would have to pay private broadcasters to air those programmes exceeds the cost of running TV7, then have TV7 instead. And NZ On Air exists for the merit good cases.

“Social value that is not otherwise available” – thank you for that phrase – it’s a perfect definition of what TVNZ7 provides for our household. Russell’s already mentioned the 50+ demographic, but since moving back to New Zealand from the US, I’ve been especially interested to see what local television offers children, and how my children interact with it. They love TV & cartoons etc like any kids, but they’ll turn first to TVNZ7 in the afternoon or evening if it has what they call “science shows” — shows like Make, Bang Goes the Theory, What Lies Beneath, Engineered, which feature both local content and overseas content that’s not featured on any of the other channels. I’m assuming you don’t need me to “articulate the social value”, let alone the economic value, of science-savvy kids 🙂 For my part, I’ve particularly enjoyed the Good Word, about NZ books and the people who make and enjoy them; also The Comic Show and various other great arts shows. Radio and magazines are also great at providing local literary and artistic content, but seeing writers and readers and artists live on TV – making reading and art glamorous and fun – is a treasure I wouldn’t be without. If TVNZ7 goes, we’ll lose those windows into our creative world – TVNZ, with its profit imperative, has a tendency to bury arts shows at peculiar times of day, or not screen them at all. Your personal definition of “social value” may or may not include the arts, but I’m quite keen to live in a country that tells its own stories, and celebrates its storytellers in every medium. Otherwise, why have local TV at all? I’d add that I love Russell’s show for its ability to synthesize and investigate timely, interesting questions that are often skipped by other channels (possibly for being “too complicated for TV”? Which is all the more reason to provide a bit of extra intellectual grit on at least one of our many, many channels). And the international documentaries regularly re-screened on TVNZ7 provide a great non-fiction alternative to the perfectly entertaining late-night cop dramas & expat reality TV shows (ahem!) on the other channels. I dunno if there’s an economic theory about the value of a populace that can make water-cooler conversation about something other than The GC – is there? But to turn your question around, it’s hard for me to see what “social value” would be gained by *removing* a perfectly valid viewing option that’s provided on the cheap and enjoyed by 1.5 million New Zealanders a month.

(In reply to Matt’s clarification). In which case, I believe I already articulated the “social value” to others of having science-savvy, arts-passionate, informed and intelligent citizens among us. Although I still find it interesting that you’re not asking the question the other way around: what is the accrued “social value” to everyone else of having watchers-of-The-GC among us?

Mind you, I am not a native speaker of Economese. My arguments tend to run more like “Because it brings happiness and a higher level of debate to the world at large and it’s not costing you much more than a penny and life is short and it takes all sorts and we’re all in it together, so why not?”

The issue is probably one of relative prices rather than the independent value of Media7. Its hard to beat free.

Most of the alternatives to Media7 are free. The relative price of Media7, should it charge even a tiny fee, is going to be #DIV/0! People may value Media7 20% more than the alternatives, but that doesnt help when it costs #DIV/0! more.

FWIW, I dont think free-to-air TV is going to exist in any meaningful way in a few decades time. At that time, a PPV Media7 may stand a chance.

I think the governmental solution for the Media7 issue is clear; ban free-to-air TV.

Could it be that the social benefits of both TVNZ7 and the GC can be quantified as pretty close to or less than zero? The money spent on those could be left in people’s pockets to spend on their own entertainment preferences. Or it could be spent on stuff that really does have a social benefit, such as helping deprived children become healthy, happy adults. Why is it that privileged, middle-class, educated people routinely categorise their entertainment (anything from TVNZ7 to ballet and opera) as a social good that should be subsidised by others? I download a lot of podcasts from Radio NZ. Yes, you could categorise much of that as educational and informative, but the bottom line is that, because I’m a privileged, middle-class, educated person, I find educational and informative podcasts entertaining. And I don’t think other New Zealanders should be subsidising my entertainment.

While my husband is watching wanker TV (which is what I call TVNZ7, just to piss him off really) you will find me busy watching The Real Housewives of Beverly Hills (or maybe Wife Swap) on my laptop. Featuring psychopaths, idealogues and machiavellian social climbers, these are truly entertaining shows and, even better, they haven’t cost the NZ taxpayer a cent :).

The bigger question is why cut TVNZ7 at all? It’s like not getting a new air freshener for your car when you are 10 months behind on the lease payments and ducking repo. The annual cost of TVNZ7 is a rounding error in the government budget! It’s just like people who complain about benefit fraud – $22 million last year on a multi-multi billion dollar budget is pretty damn good by any statistical measure. I wager than any savings from scrapping TVNZ7 will be absorped by TVNZ staffers in the form of salaries, performance incentives, travel expenses, entertainment expenses and the like over the next few years anyway. So what’s the point?

Who will pay for this? + the 50+ demographic = Rest Home and Funeral ads! I note an increase in ads aimed at these markets (especially round tea time!). So perhaps one sponsor for each show – like the very early years of TV, in fact that probably is the reason why TVNZ7 resonates so well with the over 50s (and the young, arguably) as it harks back to simpler times and talks straight to you as an equal (no patronising or sugarcoating) – it is like having the best of Ron Walton’s Science shows (both TV and Radio) and having the brains of the Brians (Priestley and Edwards) dissecting the media again – how else can we learn to recognise and both measure and discuss the elephants our rooms are filling up with?